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Altarum: Health Spending Rise Stays Anemic

Analysis by the Center for Studying Health Spending at the Ann Arbor-based Altarum Institute shows that health spending in the United States in January grew by 4.4 percent compared to January 2010 — the 28th consecutive month of historically low growth.

“The rate of increase in health spending has been hovering at a historically low level for more than two years, and health spending as a share of GDP has stabilized since the start of the economic recovery in June 2009,” said the center’s director, Charles Roehrig. “If these health spending trends continue, and if recent consensus forecasts of GDP growth materialize, we will enter a rare period of decline in the health spending share of GDP.”

Altarum’s latest “Health Sector Economic Indicators” report shows that health spending growth for the 28 months from October 2008 through January 2011 has averaged 3.9 percent and has not exceeded 4.4 percent for any given month. The health spending share of GDP was 17.7 percent in January 2011, up from 16.3 percent at the start of the recession (December 2007), but relatively unchanged from January 2010.

“For health spending as a share of GDP to stabilize over the long term, it must actually decline significantly during economic expansions to offset the increases that inevitably occur during recessions,” said Altarum’s Roehrig. “While current trends are encouraging, we have not seen such declines in past recoveries. The extent to which recent world events adversely affect GDP growth will be a key factor in whether the health spending share declines, holds steady, or even increases over the next few months.”

Altarum’s analysis is based on its own monthly health spending estimates that combine U.S. Bureau of Economic Analysis National Income and Product Account data and the recently re-benchmarked National Health Expenditure Account data. To see Altarum’s March “Health Sector Economic Indicators” report, visit www.altarum.org/healthindicators. You may also join Altarum’s distribution list to receive e-mail alerts of all future releases of the “Health Sector Economic Indicators” reports.

Altarum offers objective research and client-centered consulting skills to deliver comprehensive, systems-based improvements to health and health care. Altarum employs more than 400 people and is headquartered in Ann Arbor, with additional offices in Washington, D.C.; Sacramento, Calif.; Atlanta, Ga.; Portland, Maine; and San Antonio, Texas.